I do not believe the market is ready to be short US dollars more than they already are. Technically speaking, EUR/USD failed to close this significant day above two key technical sources of resistance. The first is 50% retracement at 1.3536, and the second is simple downtrend channel resistance. I am not ready to say 1.3380 is the next stop, but some consolidation and/or selling might be in order for now.

It just so happens that my intra-day EUR/USD count labels today's 1.3552 high as the end of Wave 3. Considering the top of Wave 1 was 1.3449, we have room to move lower in either a sharp decline, or a long, painful chop lower. For tonight, I would like to get short a one-third position at 1.3540 with stops just above the 1.3552 high, say 1.3556. Then, I am looking to stop into another third on the channel break through 1.3512, make the stop for both at 1.3540, and scale out as we approach 1.3470 wave 4 support.





Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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